Intellectual Property Protection by Chinese Courts in 2009

The Supreme People's Court,

the People's Republic of China

April 2010, Beijing

Special Remarks:

1.        This paper is published in both Chinese and English. The Chinese version shall be the authoritative version for the purpose of interpretation.

2.          As a publication for the first time, this Paper includes a brief introduction of intellectual property protection in China in the last 30 years.   

Introduction

In the last 30 years, the People's Courts have:

–––Expanded their functions and powers in intellectual property protection

The People's Courts provided judicial protection for intellectual property through civil, administrative and criminal procedures.

Civil adjudication had begun including cases relating to technology contracts toward the end of the 1970s. Trademark, patent and copyright cases were added during the mid 1980s, and unfair competition disputes in the early 1990s. The People's Courts had received many filings, and had rendered decisions for as many as 166,408 IP-related cases between 1985 and 2009.

In terms of administrative adjudicative duties, the People's Courts have been given the mandate to handle patent suits against the Patent Re-examination Board since 1985. Hence, Chinese courts are responsible for conducting judicial reviews for intellectual property administrative enforcement disputes and cases relating to granting or validation of patent or trademark. Between 1985 and 2009, the local People's Courts have altogether concluded 6387 IP-related administrative cases of first instance.  

Since the implementation of the 1979 Criminal Law, the People's Courts were able to offer protection against criminal violations of registered trademark rights under the Law. The 1997 Amendment of the Criminal Law further enhances judicial powers in criminal protection against violation of the various intellectual property rights, including the imposition of severe punishment against serious violations of intellectual property rights, such as counterfeit and piracy. Following the Judicial Interpretation Concerning the Adjudication of Cases Involving Infringement of Intellectual Property Rights jointly issued by the Supreme People's Court and the Supreme People's Procuratorate at the end of 2004, the number of IP-related criminal cases admitted and decided by the courts increased substantially; between 1997 and 2009, 14,509 IP-related criminal cases of first instance were decided by the courts.  

–––Enlarged the scope of judicial protection for intellectual property

The mid-1990s was a turning point in terms of the general nature of intellectual property cases received by the courts. Before the mid-1990s, the cases related mainly to technology contracts. From that period onwards and until 2002, patent cases were predominant. And since 2002, copyright cases represent the largest caseload.

Besides catering to the general speedy rise in traditional IP caseload involving copyright, patents, trademarks, unfair competition & technology contracts, judicial protection expanded to address emerging issues such as copyright on the internet, computer software, new plant varieties, layout-designs (topographies) of integrated circuits, folk literature & art, geographical indications, special signs, corporate names, domain names, judicial recognition of well-known marks, non-material cultural heritage, franchise, application for pre-trial provisional measures, declaration of non-infringement, and anti-monopoly. Among those, cases relating to copyright infringements on the internet have been swiftly on the rise. The People's Courts have handled cases involving all categories of intellectual property and many different types of competitive behaviour, ranging from the creation, use, protection, to the management of intellectual property.

The judicial channel is becoming the primary means of intellectual property dispute resolution. For example, to settle patent disputes, most patent owners would choose to file a civil suit with the People's Courts directly, instead of using administrative means.

The quality and efficiency of judicial decisions on cases relating to intellectual property have improved over the years. The clearance rate of first instance civil intellectual property cases increased from 75.35% in 2003 to 85.35% in 2009. Appeals fell from 59.38% in 2003 to 48.82% in 2009. Likewise, cases remanded or decisions reversed at the second instance reduced from 15.19% in 2003 to 6.00% in 2009, and retrials fell from 0.80% in 2003 to 0.33% in 2009.

Court mediation has also proven to be an effective means of dispute settlement. In recent years, more than 50%, on the average, of intellectual property civil cases were settled through court mediation at first instance.

At the same time, the People's Courts have built a respected international reputation for their fair and equitable treatment of all parties in cases involving foreign litigants.

Judicial transparency is progressively improving. The People's Courts adopt the principle of judicial openness, and effective court judgements and decisions as well as judicial information are disseminated via the media, internet, publications and other vehicles according to law. On 10 March 2006, the Supreme People's Court formally launched a website on “China IPR Judgments & Decisions”, a centralised open library of judgements and decisions rendered by the People's Courts of different levels.

–––Enhanced the effectiveness of judicial protection for intellectual property

The People's Courts have imposed severe penalties for infringements as provided by law, so as to lower the cost of protection, and increase the cost of infringement.

For valid infringement claims, infringers would be ordered to cease and desist, and would be exposed to damages awarded against them that sufficiently compensate the aggrieved party's losses. Also, the burden of proof for a right holder is reduced as appropriate, according to law. Recently, during the last instance of the patent infringement case of Wuhan Jingyuan Environmental Engineering Co., Ltd. (“WJC”) v. Fujikasui Engineering Co., Ltd and Huayang Electric Co., Ltd, the Supreme People's Court found in favour of the plaintiff, and ordered the two defendants to pay WJC RMB 50.6124 million yuan (USD 7.42 million) in damages. This was the highest damages award ever made by the Supreme People's Court for infringement of intellectual property right.

In addition, the People's Courts have taken a prudent yet effective approach to using pre-trial provisional measures, and have imposed civil sanctions on infringement according to law. Between 2002 and 2009, a total of 808 applications for pre-trial preliminary injunction in IP-related cases were admitted by local courts, 84.18% were granted approval; 1312 applications for pre-trial preservation of evidence were admitted, 93.72% were granted approval, 527 applications for pre-trial preservation of property were admitted, 96.04% were granted approval.

Criminal sanctions are an important means of protecting intellectual property by the People's Courts. Besides imposing principal punishments and regulating the use of probation, other punitive measures that include the imposition and enforcement of heavier criminal fines, recovery of criminal proceeds, seizure of criminal tools, destruction of infringing goods, ordering payment of damages, are also means to deprive perpetrators of the financial capacity to repeat the offence.

–––Improved the judicial system in intellectual property protection  

Since 1985, the Supreme People's Court has published 41 judicial interpretations relating intellectual property rights, 29 of which are currently in force. More than 40 judicial guidance documents (zhidaoxing wenjian) that helped instruct the lower courts were also issued. Especially since 2000, in line with China's accession to the World Trade Organisation and to serve the country’s need to build an “innovation-based nation”, the Supreme People's Court has issued 25 IP-related judicial interpretations. Issuance and implementation of judicial interpretations and guidance documents have provided the People's Courts with more concrete substantive and procedural bases on which they rely for adjudication of intellectual property cases. As a result, the judicial system has continued to see progress.

The jurisdiction regime for intellectual property has improved. To ensure quality adjudication of intellectual property cases, judicial interpretations provide for “designated jurisdiction” for cases involving patent, new plant varieties and layout designs of integrated circuits. In 1998, jurisdiction for other first instance civil cases relating to intellectual property was also largely transferred to the Intermediate People's Courts. In recent years, due to significant increase in the number of general intellectual property cases relating to copyrights and trademarks, designated Primary People's Courts are given jurisdiction to handle such cases.

The grounds of action in intellectual property cases have also become more rational and more comprehensive. In April 2008, the Supreme People's Court issued and implemented the Regulations on Grounds of Action for Civil Cases[1] which consolidated the grounds of action relating to intellectual property right and the competition law.

Optimised allocation of judicial resource for intellectual property has seen results. During the 1980s, civil cases involving copyrights and industrial property rights were each handled by the civil division and economic division in the People's Courts. The 1990s saw the creation of special intellectual property divisions to hear such cases. In recent years, some local courts have even conducted pilot programmes where the intellectual property division takes overall responsibility for IP-related civil, administrative and criminal cases. Also explored are the expansion of the judges panel (heyi ting) and participation of civil judges in the adjudication of criminal and administrative cases relating intellectual property rights.

–––Bettered the capacity in providing judicial protection for intellectual property

The People's Courts have endeavoured to build a robust adjudication organisation, a stronger team of judges, and high level of professionalism for intellectual property protection. In August 1993, the Beijing Intermediate and High People's Courts became the first courts in the country to introduce dedicated Intellectual Property Divisions. In October 1996, the Supreme People's Court set up its Intellectual Property Division. At present, all High People's Courts, almost all Intermediate People's Courts and all Primary People's Courts with civil jurisdiction for intellectual property cases have created dedicated intellectual property divisions. According to statistics dated October 2008, local courts had established a total of 298 separate intellectual property divisions and 84 intellectual property panels in civil divisions, and staffed 2,126 specialised intellectual property judges (currently, among the general courts, there are 31 High People's Courts, 409 Intermediate People's Courts, and 3119 Primary People's Courts).

As a general practice, the better and more experienced judges are selected to adjudicate intellectual property cases. Providing guidance for intellectual property judges and intensive training for their professional knowledge and adjudication skills is a priority, and has continuously strengthened the adjudication capacity and professional level of intellectual property judges. Thus, the combination of research, theoretical innovation and learning is a professional philosophy adopted and pursued by all intellectual property judges.

In 2009, when China celebrated its 60 anniversary and its impressive achievements that astounded the world, the People's Courts have also made new progress in intellectual property protection. Guided by the tenets of Deng Xiaoping and the “Three Represents”, the courts have ensured actualisation of the “Scientific Development Concept” and adherence to the Party and national plans. Besides the delivery of the national intellectual property strategy, there was heavy emphasis on new issues or problems encountered during adjudication of intellectual property cases. The advances made in intellectual property adjudication are also attributed to the courts'  focus on priorities, innovative methods, concentration of resources, comprehensive planning, as well as strengthened supervision and guidance.

In 2009, with their wisdom and dedication, Chinese judges wrote yet another new chapter on the judicial protection of intellectual property.

I.    Fair and Efficient Adjudication of Intellectual Property Cases According to Law has Made the Judicial System a Leading Force in Intellectual Property Protection

In 2009, despite adjudication being made difficult by rapid increase in caseload, new types of disputes, and the more high-impact and controversial cases, the People's Courts remained committed to fair and efficient disposition of cases by tapping their potential in the protection of intellectual property rights. As a result, judicial adjudication has become an even more important channel of intellectual property dispute resolution, and judicial protection of intellectual property is increasingly trusted and recognised by the various social sectors both in China and abroad.

The People's Courts have:

(1)    Adjudicated IP-related civil cases according to law, and used civil procedures to protect intellectual property and encourage proprietary innovation

The number of civil cases relating to intellectual property has increased rapidly over the years, much faster than the other categories of civil and commercial cases.

In 2009, first instance IP civil cases admitted and closed by all local courts were 30,626 and 30,509 respectively, a year-on-year increase of 25.49% and 29.73% respectively. Total disputed value of newly admitted cases of first instance was 3,084,950,000 yuan (USD 452.25 million). Of the newly admitted cases, there were 4,422 on patent, 8.54% increase from 2008; 6,906 on trademark, 10.80% increase from 2008; 15,302 on copyright, 39.73% increase from 2008; 747 on technology contracts, 19.9% increase from 2008; 1,282 on unfair competition, 8.19% increase from 2008; and 1,967 on other intellectual property, 46.79% increase from 2008. For IP-related civil cases where foreign parties are involved, the total number of closed cases was 1,361 in 2009, 19.49% more than last year; for cases involving Hong Kong, Macao or Taiwan, the number was 353, 56.89% more than last year. Newly admitted and closed intellectual property cases of second instance for the year were 5,340 and 5,492 respectively, and the respective year-on-year increases were 12.21% and16.88%. Newly admitted and closed retrial cases were 100 and 107 respectively, declining by 1.96% and 50.7% respectively from last year. In addition, since the implementation of the Anti-Monopoly Law on 1 August 2008 and until the end of 2009, total admitted and closed monopoly-related civil cases of first instance were 10 and 6 respectively.

In 2009, the Supreme People's Court admitted 297 IP-related civil cases, and closed 390 cases (including carried over cases). Of these, the newly admitted cases for retrial application totalled 230, and a total of 319 (including carried over cases) retrial application cases were closed. Hence, the Supreme People's Court has fulfilled its duty of supervision and guidance in intellectual property adjudication for all local courts.

There were several cases in 2009 that had elicited the attention of the society at-large, and had produced substantial domestic and international impact. These include Chint v. Schneider utility model patent cases; Jiang Han Petro's “rotary drilling bit” trade secret case; the Wuhan Jingyuan Environmental Engineering Co., Ltd case involving a patented process of “flue gas desulphurisation (FGD)”; the BMW (Baoma) v. Shenzhen Century Baoma Apparel Co., Ltd case of well-known mark dispute; the “Wu Liangcai” case of trademark dispute and unfair competition; the “Lu Jin” case on trademark/generic name dispute; the Cn-map (“Daodao Tong”) navigation digital map copyright case; the Golden Holiday v. CTRIP unfair competition in flight tickets reservation case; the judicial review case of St-Flora v. Trademark Review and Adjudication Board (TRAB) on the cancellation of the “Cai-le” trademark; and the “Tomato Garden” software internet piracy case in Suzhou.

Quality and efficiency of adjudication has continued to improve. Clearance rate of IP-related civil cases at first instance in all local courts rose from 2008's 81.73% to 2009's 85.04%; appeals fell from 2008's 49.32% to 2009's 48.82%. Retrials fell from 0.44% in 2008 to 0.33% in 2009, while reversal of decisions at appeal also fell from 6.20% in 2008 to 6.00% in 2009. Clearance rate of civil cases relating to intellectual property at the Supreme People's Court increased from 55.93% in 2008 to 88.64% in 2009, an improvement of 32.71%.

The courts have also leveraged the special role of provisional measures. In 2009, a total of 59 applications for pre-trial preliminary injunction in IP-related cases were admitted by local courts, 85.42% were granted approval; 237 applications for pre-trial preservation of evidence were admitted, 98.72% were granted approval; 56 applications for pre-trial preservation of property were admitted, 100% were granted approval. In general, the courts have been supportive of the use of provisional measures to protect intellectual property, as reflected in the percentage of approvals granted.

(2)     Punished perpetrators of intellectual property crimes according to law, and used criminal sanctions to deter intellectual property crimes

The People's Courts have exercised their criminal judicial powers by using different criminal sanctions against intellectual property crimes as provided by law, to crack down heavily on any criminal infringement of intellectual property rights.

In 2009, 3,660 criminal cases relating to intellectual property infringement were closed, 10.04% more than last year. The number of individuals on whom the courts' decisions became effective was 5,836, 8.31% higher than last year; of which, 5,832 persons were found guilty, 8.28% higher than the previous year. Among the closed cases, 1,007 were convicted for crimes of intellectual property infringement, 1.1% higher than last year, and decisions were effective on 1,605 persons, 3.14% lower than last year; 646 were found guilty of producing and selling counterfeit and inferior goods (involving infringement of intellectual property right), and the decisions were effective on 1,114 persons; 1,973 were found guilty of illegal business operations (involving infringement of intellectual property right), and the decisions were effective on 3,076 persons; the remaining 34 were found guilty of other crimes relating to infringement of intellectual property, and decisions were effective on 41 persons.

The decisions of some cases have created a significant impact within and outside the country. For example, the Huqiu District People's Court of Suzhou City in Jiangsu Province had found Chengdu Gongruan Networking Technology Co., Ltd and its founders Sun Xianzhong and Hong Lei guilty of copyright infringement (“Tomato Garden” software internet piracy case). As the biggest crackdown on large-scale software piracy, the case has hit hard on those who had hoped to illegitimately gain from piracy as well as other infringers, and was evidence of the government's strict observance of international conventions and China's equal protection of all copyright holders.

(3)    Conducted judicial review of intellectual property administrative actions according to law, and used supervision of and support for administrative law enforcement to protect intellectual property

Through adjudicating administrative cases, the People's Courts have conducted judicial reviews of the government's conduct relating to intellectual property matters, thus supervising and supporting administrative authorities in carrying out lawful administrative processes, and in protecting the legitimate rights of the authorities' administrative counterparts. Furthermore, they have also maintained administrative order and facilitated administrative protection of intellectual property.

In 2009, local courts nationwide admitted 2,072 and closed 1,971 IP administrative cases of first instance, an increase of 92.92% and 90.99% respectively over the previous year. Of these, 688 new patent cases were admitted, 19.03% more than last year; 1,376 trademark cases, 184.3% more than last year; 4 copyright cases, a drop of 42.86% from 2008; and 4 cases on other subjects. The Supreme People’s Court admitted 54 such new cases and closed 56 (including carried over cases).

Administrative litigation cases relating intellectual property are basically cases concerning the grant or validation of patent or trademark, where the defendants are principally two entities: the Patent Re-examination Board under the State Intellectual Property Office, and the Trademark Review and Adjudication Board under the State Administration for Industry and Commerce.

The number of IP-related administrative cases was a record high, and caseload for the courts was significantly heavier in 2009. Based on statistics, there were 626 new patent-related administrative cases of first instance admitted by the Beijing First Intermediate People's Court, and 594 such cases closed by the same, an increase of 20.38% and 34.69% respectively from the previous year. For the Beijing High People's Court, 361 new patent-related administrative cases of second instance were admitted, and 337 closed, an increase of 11.42% and 17.01% from last year. For trademark-related administrative cases, the Beijing First Intermediate People's Court admitted 1,346 new first instance cases and closed 1,222, 209.42% and 333.33% respectively higher than last year. As for the Beijing High People's Court, 465 such new second instance cases were admitted, and 416 cases were closed, an increase of 144.73% and 195.03% respectively over the previous year.

(4)     Increased the use of mediation to settle intellectual property disputes, and established a comprehensive mediation system for intellectual property cases

Besides adjudication, the People's Courts used mediation–– a traditional “oriental experience” ––as an alternative dispute resolution option. For cases relating to intellectual property, the courts operate according to the principle of “give priority to mediation; combine mediation and adjudication” (tiaojie youxian, tiaopan jiehe) to ensure full and final resolution.

In 2009, the People's Courts continued to improve their mediation capabilities, and this is seen in the rising proportion of mediated settlements. 61.08% of IP-related civil cases at local courts were resolved through mediation or withdrawal of claims after mediation, 5.22% more than the previous year.

In a utility patent dispute on the Schneider miniature circuit breaker, the High People's Court of Zhejiang Province mediated for Schneider Electric and Chint Group Corp at appeal. This had led to a global settlement for the parties. Settlement had not only put to rest the various intellectual property disputes between the parties in many countries, but created a healthy competitive environment for the parties and improved their relationship.

Another case involved the misappropriation of Jiang Han Petro Drill Corp's “rotary drilling bit” trade secret. After nearly 50 rounds of mediation, the parties arrived at a blanket mediation agreement for the case, and succeeded in resolving all disputes between them. The parties were satisfied with the “win-win” situation which mediation had brought about.

A third case was an administrative suit involving a dispute over the trademark “Hao Xiang Ni” (“Missing You”), the case was mediated by the Supreme People's Court, with the assistance of the High People's Court of Henan Province, together with the local government authorities. The parties finally settled, and the petitioner also withdrew its retrial application for 4 cases. In addition, the parties settled another 105 cases of trademark dispute and infringement.

The People's Courts are always seeking innovative mediation methods. By collaborating with the relevant authorities, the courts have improved our system of dispute resolution that links multiple forms of ADR with litigation to ensure complete resolution of problems.

On 3 November, on behalf of all Beijing courts, the Beijing High People's Court formally launched the Authorised Mediation Mechanism for Internet Disputes with the Internet Mediation Centre of the Internet Society of China. The initiative was welcomed by society in general. The guidelines on mediation in civil intellectual property cases issued by the High People's Courts of Zhejiang, Sichuan and Guangxi have also proven effective. For retrial applications, the Supreme People's Court's focus is on facilitating conciliation between the parties. If parties agree to settle, the court may incorporate, upon parties' request, the relevant stipulations in the settlement agreement in its written ruling approving withdrawal of retrial application, as well as correct any error in the original judgement.

(5)     Advanced the open adjudication initiative to improve judicial transparency in intellectual property protection

In 2009, the People's Courts furthered the open adjudication initiative in IP-related cases according to the Constitution, and observed procedural openness as set forth under the three procedural laws (Civil, Administrative & Criminal). Based on the Six Provisions on Judicial Openness[2], the Several Provisions on the People's Courts Accepting Supervision by the News Media and by Public Opinion[3], and the Several Opinions on Enhancing Adjudication Openness in the People's Courts[4] issued by the Supreme People's Court, local courts have become increasingly transparent and have sought additional avenues to disseminate judicial information.

To ensure transparency, the entire adjudication process is open. Courts are required to notify parties according to law, so that all parties are guaranteed of their right of information, of participation, of expression and of supervision at every stage of a procedure relating to an intellectual property matter, from case admission, to hearing, enforcement, and supervision. The courts voluntarily accept social supervision to ensure protection of the parties' interests and dispensation of justice.

The China IPR Judgments & Decisions website and websites of local courts that publish written judgements and decisions of intellectual property cases are platforms built to enable public access to judicial information through the internet. These platforms are continually improved, and information constantly updated to provide prompt and open information access. By the end of 2009, 34,263 IP-related written judgements and decisions in force were published on the China IPR Judgments & Decisions website.

In its Conference on Intellectual Property Adjudication for Zhejiang People's Courts, the High People's Court of Zhejiang Province's invitation of foreign government officials, representatives of international organisations, and local and foreign media demonstrates the transparency and openness in its intellectual property adjudication system.

II.   Judicial Protection for Intellectual Property has Served the Needs of Socioeconomic Development and has Observed and Delivered the National Intellectual Property Strategy

Adjudication of IP-related cases is closely related to the Party priorities and national plans. In 2009, with the national strategy to “safeguard growth, livelihoods, and stability” in mind, the People’s Courts have helped enforce the national intellectual property strategy through elaboration of the judicial system to protect intellectual property. By providing judicial safeguards, the People’s Courts have indeed contributed to the building of an “innovation-based nation” and a xiaokang society.

The People's Courts have:

(1)     Adopted effective measures to ensure the observation and delivery of the national intellectual property strategy

On 5 June 2008, the State Council issued the Outline of the National Intellectual Property Strategy[5], based on the need to “implement an intellectual property strategy” as indicated at the 17th Party Congress. Delivery of the national intellectual property strategy since its implementation has been the People's Courts' top priority. The Supreme People's Court has formed a steering group for implementing the national intellectual property strategy, and exposited more than 20 specific duties for the People's Courts according to the Outline.

On 23 March 2009, the Supreme People's Court published the Opinions on Several Issues Concerning the Implementation of the Outline of the National Intellectual Property Strategy[6] (“Opinions”). The Opinions specified the following aspects: the importance of understanding the need to implement the national intellectual property strategy; necessity for the judicial system to be the primary means of intellectual property protection; more effective judicial protection of intellectual property; elaboration of the adjudication system and work mechanism; optimisation of judicial resource allocation; improvement in the provision of judicial interpretations; strengthening of capacity building. These will be the guiding principles in the People's Courts' adjudication of intellectual property cases in the near future, and the foundation on which the People's Courts would deliver the national intellectual property strategy.

By complying with the Supreme People's Court's plans and requirements, and taking into consideration their local circumstances, the People's Courts nationwide have taken practical steps to ensure achievement of the national intellectual property strategy. The High People's Courts of Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Hunan, Sichuan, Gansu and Qinghai have issued guidance documents pursuant to the implementation of the national intellectual property strategy.

(2)     Addressed the international financial crisis by leveraging the unique facility of judicial protection for intellectual property

To address the adverse impacts of the international financial crisis on our real economy, the Supreme People's Court organised the “Legal Forum on Using Intellectual Property Adjudication as a Means to Cope with the Adverse Impact of the Financial Crisis on the Real Economy and Service Outsourcing” in January, to discuss specific measures in intellectual property adjudication that could facilitate steady growth of the economy.

In April, the Supreme People's Court issued the Opinions on Several Issues Concerning the Use of Intellectual Property Adjudication to Serve Overall Interests under the Current Economic Situation[7]. The Opinions contain renewed expectations and demands on intellectual property adjudication, based on the austere and complex domestic and international economic landscape, and have defined and elaborated judicial policies for intellectual property protection under the current economic climate in four aspects: intellectual property adjudication must be more specific and effective in serving bigger interests; effectiveness of patent protection must be enhanced; protection of commercial marks must be strengthened; the intellectual property adjudication system must be improved. In particular, the Opinions clearly pointed out that “under the current economic climate, judicial protection of intellectual property must only be strengthened and enhanced, and cannot be weakened or relaxed.” The statement was a prompt response and needful clarification to the prevailing social debate on whether stronger intellectual property protection was required in view of the crisis. Not only were the Opinions necessarily instructive to the People's Courts when adjudicating intellectual property cases, they helped guide and regulate business and market behaviour. The Opinions created major impact at the domestic and international level, and were applauded by the local and international academia and society at-large.

At the local level, the courts also took steps to overcome repercussions brought on by the financial crisis. For example, the High People's Courts of Jiangsu Province, Anhui Province and Guangxi Autonomous Region issued special guidance opinions, setting forth the specifics in intellectual property adjudication, so as to promote proprietary innovation at the local level. In conjunction with the local Administration for Industry and Commerce and the Customs, the High People's Court of Zhejiang Province convened a seminar to discuss the trademark legal issues in OEM branding for foreign parties to encourage shifting from OEM manufacturing and processing to proprietary innovation. In Fujian Province, the courts have strengthened communication and linkage with the various authorities involved in intellectual property protection, such as the police, prosecutor's office, industry & commerce administration and copyright bureau. In doing so, it created positive dynamics and synergistic relationships between the judicial protection and administrative law enforcement. The High People's Court of Guangdong Province has also organised seminars through various channels and obtained in-depth industry knowledge to explore solutions on the part of the judiciary.

(3)     Elaborated the intellectual property adjudication system and work mechanism, and strengthened the intellectual property adjudication institution

The People's Courts have:

–––Centralised adjudication of IP-related administrative cases involving the granting and validation of patent or trademark

On 22 June 2009, the Supreme People's Court issued the Provisions on the Division of Labour in the Adjudication of Intellectual Property Administrative Cases Pertaining to the Granting or Validation of Patents and Trademarks[8], setting forth that as of 1 July 2009, cases of first & second instances and retrial cases relating to the granting and validation of trademarks, patents, layout designs of integrate circuits and new plant varieties, to be adjudicated by the intellectual property divisions of the relevant Beijing Intermediate People's Courts, Beijing High People's Court and the Supreme People’s Court. By issuing the Provisions, the Supreme People's Court had effectively ended the tradition of “separate adjudication” of such cases by either the intellectual property divisions or the administrative divisions of the relevant courts.

This was an important step where the People's Courts observed and delivered the national intellectual property strategy through optimisation of judicial resources, prompt and effective resolution of disputes, unified adjudication criteria, and the dominant role of the judiciary in intellectual property protection. By complying with the Provisions and promptly reconfiguring their judicial resources, the relevant courts in Beijing have got off to a good start in centralised adjudication of such cases.

––– Promoted implementation of pilot programmes for centralisedadjudication of civil, administrative and criminal cases relating to intellectual property by the intellectual property divisions

Based on the Outline of the National Intellectual Property Strategy, the Supreme People's Court studied the pilot projects initiated by the local People's Courts on the centralised adjudication of IP-related civil, administrative and criminal cases (“‘Three-in-One’ Pilot”). In 2009, approval for the ‘Three-in-One’ Pilot was given by the Supreme People's Court to the High People's Court of Jiangsu Province, the courts of Inner Mongolia Autonomous Region, the High People's Court of Henan Province and two Intermediate People's Courts under its jurisdiction (in Zhengzhou and Luoyang), and the People's Court of Heping District, Tianjin Municipality. By the end of 2009, there were 5 High People's Courts, 44 Intermediate People's Courts and 29 Primary People's Courts in the country that had launched the pilot. The High People's Courts of the pilot regions have issued normative documents to regulate and coordinate pilot-related matters.

–––Adapted and improved jurisdiction arrangement for intellectual property cases

In May 2009, the Supreme People's Court issued the Notice on the Adjustment and Improvement of the Jurisdiction Arrangement Concerning Intellectual Property Cases[9], providing that local courts should continue to adhere to the “designated jurisdiction” principle for technology-related cases and strictly limit the increase of Intermediate People's Courts with designated jurisdiction for patent cases. Meanwhile, the Notice also requires intermediate and primary courts to accept cases from neighbouring jurisdictions, provided that it is convenient for both the litigants and the court.

The Supreme People's Court has designated the People's Court of Yiwu City in Zhejiang Province as the pilot court to deal with first instance patent disputes in utility models and industrial designs, and the Intermediate People's Courts of Harbin, Qiqihar, Yichang, Xiangfan, Xiamen, Quanzhou and Baotou, and the No.12 and No. 8 Agricultural Intermediate People's Courts of the Production and Construction Corps of Xinjiang to accept cases from neighbouring jurisdictions.

The Supreme People's Court places high priority in having a rational intellectual property jurisdiction arrangement as well as balanced-development of all courts in intellectual property adjudication. As primary and intermediate courts are more accessible to the disputing parties, the Supreme People's Court has strengthened capacity of these courts in intellectual property protection.

As at end 2009, the number of Intermediate People's Courts designated by the Supreme People's Court to handle specific categories of intellectual property cases was as follows: 75 for patent, 41 for new plant variety, 46 for layout design of integrated circuit, and 41 for recognition of well-known marks. 92 primary courts are designated to adjudicate general IP-related civil cases.

(4)     Organised the “Optimisation of Judicial Environment for Proprietary Innovation” annual thematic event pertaining to intellectual property adjudication, to nurture a judicial climate that encourages proprietary innovation

To address the problems in the judicial protection of Intellectual property that affect and limit proprietary innovation, increase the level of judicial protection and create a judicial climate conducive for proprietary innovation, the Supreme People's Court issued the Notice on the Organising of the “Optimisation of Judicial Environment for Proprietary Innovations” Annual Thematic Activity in All Courts Across the Country[10] on 9 April 2009. In doing so, the Supreme People's Court hopes to encourage innovation and birth of proprietary brands, which would create new industries, generate demand, and nurture new areas of economic growth. As such, the Notice requires the courts to do better adjudication work in patent cases to facilitate technological innovation, in monopoly and unfair competition cases to create a level-playing field in the market and in trademark cases to promote brand economy. In addition, the Notice also requires the strengthening of adjudication supervision and work guidance and the unification of criteria in application of law.

All courts have formulated implementation plans for this event based on their local circumstances. The plans have been carried out in phases. The thematic activity was one of the highlights and priorities of the People's Courts in 2009. It has enabled the courts to achieve significant progress in their delivery of the national intellectual property strategy and in enabling the judicial system to play a leading role in intellectual property protection.

(5)     Strengthened judicial responses to intellectual property matters for the Shanghai World Expo, and proactively provided judicial protection

2010 is another important year for China after the 2008 Beijing Olympics. It is the year of the Expo 2010, Shanghai. The People's Courts recognised the important significance of the Expo, and have worked towards offering dynamic and quality judicial services. The courts have provided fair, efficient and authoritative judicial protection of intellectual property to ensure a “successful, splendid and unforgettable exposition”.

As intellectual property protection is priority at the Shanghai Expo, in 2009, the Supreme People's Court took important steps to study the legal issues that might arise when addressing intellectual property disputes relating to the Expo.

The three levels of courts in Shanghai, the Expo city, have been active in meeting the Expo’s need for intellectual property protection. Besides providing swift and appropriate resolution of Expo-related intellectual property disputes, the courts have also tried to expand their judicial functions to render comprehensive services and safeguards for the Expo.

The Peoples' Court of Pudong New District, Shanghai, conducted a live webcast of hearing the first Expo-related intellectual property criminal case. Finally, the court found the defendant, Shanghai Changzheng Material Co., Ltd guilty of selling counterfeit trademark goods, and imposed a criminal fine of 180,000 yuan (USD 26400), and sentenced its principal Tan Tian to 2 years' imprisonment and a criminal fine of 100,000 yuan (USD 14670). The case was a good example of the effectiveness of judicial protection of Expo intellectual property

(6)     Organised the “Intellectual Property Publicity Week” to enhance the general public's awareness of intellectual property

In line with the events in the “Intellectual Property Publicity Week” organised by the relevant national authorities, the Supreme People's Court put together a series of varied and interesting publicity activities around the World Intellectual Property Day on 26 April. By organising press conferences, formulating guidance documents, publishing annual case reports, announcing typical cases, arranging open court hearings and convening seminars, the Supreme People's Court has presented a comprehensive and multi-dimensional showcase of the Chinese courts' achievements, their current situation and future plans in intellectual property judicial protection. Also, by using judicial case studies, the public was given a vivid demonstration how the law works, from which, awareness of intellectual property protection was elevated, respect for knowledge established, innovative spirit cultivated, and an honest and law-abiding culture fostered.

Different regional courts have planned activities distinctive to their locality. For example, the Tianjin High People's Court organised a seminar for judges and writers; the High People's Courts of Shandong Province and Hubei Province convened public seminars on judicial protection of intellectual property; intellectual property judges of the High People's Courts of Guizhou Province, Gansu Province and Qinghai Province, and the Intermediate People's Court of Xining City went on the streets to provide community intellectual property advisory services; the High People's Court of Liaoning Province and Intermediate People's Court of Changsha City, Hunan Province, provided live webcast of hearings of intellectual property cases. The major media and key websites at the Central level, as well as key local media, have reported extensively on the “Intellectual Property Publicity Week” organised by courts.

III. Enhanced Judicial Supervision and Guidance has Created Greater Consistency in Adjudication Practices and Decision-Making

The uniform application of law is the basic requisite of a fair, efficient and authoritative judicial system for intellectual property protection. In 2009, the People’s Courts have stepped up supervision of adjudication and professional guidance to maintain uniformity in intellectual property adjudication.

The People's Courts have:

(1)     Drafted and issued judicial interpretations of intellectual property law to standardise adjudication criteria

The Supreme People's Court has always given priority to use judicial interpretations to standardise the application of laws. In 2009, with the cooperation and participation of local courts across the country, it organised special studies on the issues of determination of patent infringement, judicial protection of well-known marks, anti-monopoly civil actions, adjudication of cases relating to patent & trademark granting & validation, and internet copyright protection. Judicial interpretations and issue-specific documents pertaining to the subjects of the studies were also drafted.

The Supreme People's Court' s Interpretation Concerning Several Issues in the Application of Law During Adjudication of Civil Cases Involving the Protection of Well-Known Marks[11]issued on 22 April further defines the conditions for rendering protection for well-known marks, as well as the criteria and evidence requirements. It also answers many social concerns on the protection of well-known marks, and catalyses the healthy development of brand economy.

In addition, the Supreme People's Court' s Interpretation concerning Several Issues in the Application of Law in Patent Infringement Disputes[12]issued on 28 December provided for the rules of patent claim construction and the criteria for determining patent infringement. The Interpretation is instrumental in providing guidance to ensure correct implementation of the amended Patent Law and proper adjudication of patent cases, and to incentivise proprietary innovation.

Supported by extensive research, the Supreme People's Court drafted the Provisions on the Application of Law concerning Several Issues in the Trial of Monopoly Civil Cases (Preliminary Draft)[13] and the Opinions concerning Several Issues in the Trial of Trademark Granting and Validation Administrative Cases (Preliminary Draft)[14]. Based on the drafts, the Supreme People's Court solicited suggestions openly and extensively to prepare for further improvements and amendments, as well as their eventual announcement and implementation.

(2)     Enhanced professional guidance in intellectual property adjudication to ensure correct application of law  

Superior courts place important emphasis on providing adjudicative guidance for inferior courts. In 2009, by providing judicial documents (sifa wenjian), minutes of meetings, and replies (pifu) concerning adjudication of typical cases, the Supreme People's Court and the provincial High People's Court had set forth clear judicial principles and criteria on intellectual property protection, and by doing so, they had promptly resolved certain notable issues in judicial practice. In particular, the superior courts have tried to issue judicial documents that serve as general guidance for all cases.

To improve the regime of judicial protection for well-known marks and resolve problems in the determination of well-known marks, the Supreme People's Court issued the Notice on the Jurisdiction over Civil Disputes concerning the Determination of Well-known Marks[15] on 5 January 2009. The Notice assigns jurisdiction over cases relating to well-known marks to the Intermediate People's Courts of provincial capitals and cities with provincial-level status in economic management (jihua danlie shi); thus, maintained people's trust in the judicial protection of intellectual property.

For proper implementation of the revised Patent Law, the Supreme People's Court has also issued the Notice on the Study and Enforcement of the Revised Patent Law[16], explaining application issues in relation to the transition (i.e. old law vs. new law). Local courts have also generally been diligent in summarising and reviewing their adjudication experiences. For instance, systematic guidelines have been developed for patent cases relating to industrial design by the High People's Court of Beijing Municipality, for internet copyright infringement cases by the High People's Courts of Zhejiang, Hubei and Yunnan provinces, for audiovisual copyright infringement cases by the High People's Courts of Guangdong Province, and for cases relating to the determination of well-known marks by the High People's Courts of Shanxi and Qinghai provinces. Furthermore, for relevant and similar cases of certain social impact, local courts have also promptly communicated and coordinated with other courts to ensure the same adjudication standards are applied and consistent adjudication outcomes obtained; hence, maintained judicial authority.

(3)     Adopted innovative instructional methods by using typical intellectual property cases 

On 26 April, the World Intellectual Property Day, the Supreme People's Court published the 10 major cases relating to national judicial protection of intellectual property for 2008, and 50 typical cases for the same year. Such publication has helped reinforce the demonstrative and instructive effect of typical cases.

The Supreme People's Court Annual Report (2008) on Intellectual Property Cases[17] was the first publication of its kind. The Report is a compilation of abstracts of the grounds of judgement of 23 typical cases, specially selected from 184 cases decided and disposed in 2008 by the Supreme People's Court. As the first compendium of typical cases adjudicated by the Supreme People's Court, it was an innovative approach to the adjudication guidance system. This has contributed to the prompt summarisation of adjudication experience, improvement of adjudication guidance and uniformity in application of law.

Local courts, too, have collated and published typical cases and theoretical analyses to provide instructive guidance for local judicial practice. The Selected Judgments of Intellectual Property Cases of Shanghai Court 1984-2008 (Chinese-English Edition)[18] published by the High People’s Court of Shanghai Municipality was well-received by local and foreign readers.

(4)     Increased research & study to provide theoretical support in intellectual property adjudication

Theoretical innovation as a means to inform intellectual property adjudication has always been a priority to the People's Courts. Participation in international exchanges and knowledge sharing in relation to judicial protection of intellectual property is regarded as an important means of elevating the international influence of Chinese courts in intellectual property judicial protection.

In 2009, the People's Courts successfully organised a series of studies, from which valuable study outcomes were generated, and fecund adjudication theories derived. The outcomes were translated into operable formats by way of guiding documents and work measures.

With the support of local courts, the Supreme People's Court organised special studies on internet copyright infringement, damages for copyright infringement of audiovisual works, and anti-monopoly civil litigation. The Supreme People's Court hosted the International Conference on Judicial Protection of Internet Copyright, Seminar on Anti-Monopoly Civil Litigation, and International Conference on Judicial Protection of Intellectual Property. Other activities include the European competition law study tour, which took the study group to the United Kingdom, Belgium, Germany and Luxemburg, the “China-U.S. Seminar on Private Enforcement of Anti-Monopoly Law” jointed organised with the United States Department of Justice and Federal Trade Commission, and the dissemination of Intellectual Property Adjudication Newsletter. These are activities that offered more tools to the study of intellectual property theory, and facilitated the refinement and unification of adjudication standards.

On 8 January, the Supreme People's Court approved the setting up of the China Intellectual Property Judicial Protection Research Base (Suzhou) at the Intermediate People's Court of Suzhou City, Jiangsu Province, to provide basic research support in the study of judicial protection relating to intellectual property for all courts across the country.

By leveraging the research platform provided by the Specialised Committee on Intellectual Property Adjudication Theory under the Adjudication Theory Studies Institution of the China Law Society, the Intellectual Property Division of the Supreme People's Court and the Committee has jointly convened a series of seminars and meetings. On 19 April, the Committee also established an intellectual property adjudication research base in the People's Court of Shapingba District in Chongqing Municipality.

Local courts have continued to gain insight to adjudication principles. Many have taken the initiative to organise conferences on important topics, based on local circumstances and adjudication needs. The positive results culminating from these meetings provide valuable theoretical support for their adjudication practice. 

At the same time, the People's Courts have been active participants in legislative and law revision activities relating to intellectual property. Through task forces that take part in the drafting and revision of the Trademark Law, Law against Unfair Competition, Implementing Regulations of the Patent Law, Regulations on the Customs Protection of Intellectual Property Rights, and draft of Regulations for the Protection of Folk Literature and Arts, the People's Courts have provided constructive opinions and recommendations.

In view of the outstanding contributions of the Chinese courts and judges in intellectual property judicial protection, two intellectual property judges from China made it to the Managing Intellectual Property list of the “50 most influential people in intellectual property in 2009”.

IV. Capacity Building for Intellectual Property Judges has Improved Judicial Competence and Quality

A team of high calibre judges is a prerequisite for strict, impartial and reasonable judicial practice.

In 2009, the People's Courts launched the “People's Judge for the People” (“renmin faguan wei renmin”) thematic event. Through the activity, the People's Courts strengthened the intellectual property adjudication organisation, professional capacities, and integrity-building. The courts are perpetually working to elevate the overall calibre of intellectual property judges, and to buttress the organisational framework and talent base for intellectual property adjudication.

The People's Courts have:

(1)     Strengthened the organisational structure for intellectual property adjudication

2009 saw a stronger and better intellectual property adjudication organisation within Chinese courts. 

Besides establishing dedicated intellectual property divisions in most Intermediate People's Courts, intellectual property judges are selected from a pool of persons well-versed in law and foreign language, and who possess specialised technical knowledge and good adjudication experience. The courts emphasises in preparing specialised intellectual property judges, and improving the professional make-up of the intellectual property adjudication team.

Normally, the case admission, criminal adjudication, administrative adjudication and enforcement divisions of the courts of various levels would designate specific panels or judges to admit, adjudicate and execute intellectual property cases. In 2009, the People's Courts had stepped up its personnel infrastructural-building by allocating additional and better human resources, to solve the problem of insufficient manpower for intellectual property adjudication in certain localities.

To draw on the specialised knowledge and unique role of professionals, the local courts would select and recommend experts from the relevant fields to be people’s assessors (lay judges), based on circumstances of the intellectual property cases. For example, the High People's Court of Tianjin Municipality has specially issued the Opinions on Enhancing the Participation of People' s Assessors in the Adjudication of Intellectual Property Cases[19]; the Supreme People's Court, High People's Courts of Shanghai, Jiangsu, Zhejiang, Guangdong and Sichuan, and the First and Second Intermediate People's Courts of Beijing Municipality have also continued personnel exchanges with intellectual property authorities such as the Patent Re-examination Board. Local courts also try to benefit from technical experts' role in helping resolve intellectual property disputes. For example, the High People's Court of Shanghai Municipality has established a technical expert pool for intellectual property adjudication.

(2)     Strengthened professional capacity in the adjudication of intellectual property cases

The People's Courts place great importance in providing professional knowledge and adjudication skills training for intellectual property judges. To develop a stronger team of specialised intellectual property judges, training is problem-specific and targeted at the latest issues. In particular, to elevate the overall standard of intellectual property adjudication, primary courts as well as courts located in the central and western regions of China are provided with training support.

On August 2009, the Supreme People's Court organised a “Workshop for National Courts on New Issues in Intellectual Property Adjudication” at the National Judges College. Training was provided for more than 240 intellectual property judges from intermediate and primary courts. Similar workshops have also been organised by the High People’s Court in Beijing, Heilongjiang, Zhejiang, Shandong, Hubei, Hunan, Guangxi and Chongqing.

(3)     Focused on improving the integrity of judges

In 2009, the People's Courts continued to advance judges' education in the socialist rule of law concept. Intellectual property judges were nurtured to observe the core judicial values of fairness, honesty and service for the people, and to resist any corruptive idea or impropriety. Efforts were made to elevate the political awareness, professional capability, and work ethics of intellectual property judges. Fair and people-oriented personalities were used as role models to encourage and develop intellectual property judges into persons who listen to, care for, and work for the people.

On 17 November, the Supreme People's Court announced the Decision to Award the Title of "National Adjudication Expert" to 45 Judges, Such As Kong Xiangjun, And Others.[20]The list included 6 intellectual property judges, which reflects the excellent professional abilities of intellectual property judges in China.

Results are from the past. All the achievements of the last 30 years and of 2009 will be part of history.

In 2010, our national intellectual property strategy will enter a critical phase, where new circumstances, new tasks and new challenges await. The People's Courts’ primary duty is to deliver the national strategy to accelerate the remodelling of economic growth, while maintaining a stable but relatively fast growth. As such, the People's Courts will enhance effectiveness of judicial protection for intellectual property through adjudication of cases, implement the national intellectual property strategy, and enable the judicial system to be the primary means of intellectual property protection. They will also power judicial reforms in the intellectual property domain, refine the intellectual property adjudication system and work mechanism, and improve the capacity and level of judicial protection for intellectual property. Finally, they will step up supervision and guidance for intellectual property adjudication, and strengthen capacity building for its team of intellectual property judges.

By providing powerful judicial protection for intellectual property, the People's Courts hope to contribute effectively to the building of an “innovation-based nation” and a xiaokang society.